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The Reserve Bank of India (RBI) says that one of the priorities of the G20 under the Indian Presidency is to “develop a global regulatory framework, including the possibility of banning, unbacked crypto assets, stablecoins and challenges. “. India’s central bank has warned that “turmoil in the crypto asset market” is among “major risks that could jeopardize global financial stability.”
Central Bank of India on Crypto Regulation
India’s central bank, the Reserve Bank of India (RBI), released its Financial Stability Report (FSR) for December on Thursday. The 172-page report includes discussions on crypto assets, central bank digital currencies (CBDCs), and decentralized finance (defi).
“Regulating new technologies and new business models after they have reached a systemic level is a challenge,” the RBI report said. “To promote responsible innovation and mitigate financial stability risks in the crypto ecosystem, it is essential that policymakers design an appropriate policy approach.” India’s central bank continued:
In this context, under India’s G20 Presidency, one of the priorities is to develop a global regulatory framework, including the possibility of banning, unbacked crypto assets, stablecoins and defis.
The central bank named “turmoil in the crypto asset market” as one of the “major risks that could jeopardize global financial stability.” The RBI also said that crypto assets are highly volatile, “exhibit high correlations with equities” and have fallen as inflation has risen.
The report further notes that the collapse of crypto exchange FTX and subsequent sell-offs in the crypto market “have highlighted the inherent vulnerabilities in the crypto ecosystem.” It also highlights the collapse of terra/luna in May and the bankruptcy filings of several major crypto firms, including crypto hedge fund Three Arrows Capital (3AC) and crypto lender Celsius Network.
G20 Members to Discuss Crypto Regulation
Ajay Seth, India’s Economic Affairs Secretary, said earlier this month that G20 members aim to build policy consensus on crypto assets for better global regulation. Indian Finance Minister Nirmala Sitharaman said in October that crypto would be on India’s agenda during its G20 presidency, adding that she hoped a technology-driven regulatory framework for assets cryptographic would be established.
Members of the Group of 20 (G20) are Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Republic of Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, United Kingdom, United States and European Union. The group accounts for approximately 85% of global GDP.
India’s central bank, however, has repeatedly recommended banning all non-state-issued cryptocurrencies, including bitcoin and ether. Last week, RBI Governor Shaktikanta Das warned that cryptocurrencies will cause the next financial crisis if they are not banned. However, India’s finance minister said in July that banning and regulating crypto can only be effective with significant international collaboration.
Do you think the G20 will develop global regulation that benefits the crypto industry? Let us know in the comments section below.
Kevin Helms
Image credits: Shutterstock, Pixabay, Wiki Commons
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